In an earlier post Advantages / Disadvantges SubTo / Lease Option the following was posted.
"My husband and I do “Subject-To” deals. We had a “seller” decide that they wanted their original house back. This couple was behind on their payments by 6 months, and we talked with them for over 5 months before we had them deed us the property. Another investor tried to sell the property outright, but didn’t get even one call on it.
The couple moved out and we paid up the back payments and put new carpeting inside. When we took over the property the house had a mortgage on it equal to or more than what the property was worth.
The couple took our paper work to several attorneys. In one of their emails to us they said, “Our attorney helped us understand that what you did for us was a good thing.” Several months later a mortgage broker contacted them, and told them that they could refinance again (that is exactly why they were in the trouble that they were in) they had refinanced the house every other year for a few thousand dollars.
They told me that they couldn’t resist all the phone calls and letters in the mail telling them to refinance. They had been in foreclosure and then bankruptcy in 1995 and were in foreclosure again in 2001. They could not afford the high payments.
Well, they took their paper work to one more attorney. They told him that they didn’t get any compensation for the property and that they didn’t understand that they were deeding us the property (after all they only had a 6th grade education they explained to him) and then they had their attorney write us a letter saying that they were revoking our Power of Attorney and the Assignment of Beneficial Interest In the Land Trust.
In talking with this same attorney to let him know what really was going on, we told him that we would be willing to let them have the house back if they paid us the $8200 that we had paid out bringing their payments current as well as carpeting the house. He said that we were being very reasonable and he would relay the information to his clients. (We were even willing to take a car, etc. in place of cash. They told us that their car wasn’t in their name.) The couple told their attorney that would be fine, slept on it and the next day emailed us saying that they had prayed about it and they decided they wanted the house back without paying us anything. Their attorney said for them to pursue this case any further they must pay him some money. Of course, they don’t have any money.
That is when they complained to the Better Business Bureau, the Real Estate Commission and the Attorney General’s Office. We handled the BBB, as well as the Real Estate Commission. Then we got a letter from the Attorney General’s office. I called and set up an appointment with them to explain the situation. Was I wrong to do that? I was greeted by two women who did not hear a word I said. They told me that what we are doing is immoral and deceitful. They said our website reads like an infomercial.
Our ad that reads “We Buy Houses” is misleading, they said, because we don’t really buy houses. She said that we are scamming people and what is more, we were scammed by the people who taught us to do this. They said that this way of doing business doesn’t work. I explained that I was sure that she has seen people in her office who really are taking advantage of people; however, we were doing everything ethically, etc. She would not listen to anything I had to say. (I did tell her that I wish that the moisturizer that I use every morning that promises to erase my wrinkles, would.)
Anyway, we parted company, and I was told to not do ANY real estate transactions until I heard back from her. We hired an attorney who also told her that we would comply with her demand that we would not do any business until we heard from her. Well, here it is 2 months later and we finally got a letter from her. Here is just a sample of what she is demanding: she wants a list of all the “sellers” we “bought” houses from “Subject-To” so that she can “set things right”. She thinks that we have lied to our “sellers” because she doesn’t believe that people would ever sign our paper work if they knew the real truth: that the mortgage stays in their name yet the property is deeded to us, actually to a trust.
She has not mentioned one thing that she knows we are doing that is illegal-just deceptive. She thinks that there “may be language buried somewhere in our paper work” that isn’t fully disclosed to our clients. Well, she has had our paper work for over 2 months. If she hasn’t found it, what am I suppose to do. There isn’t any language buried in our paper work.
We feel very strongly that what we do in this business is very helpful and totally legal. We have saved many houses from foreclosure by giving people information so that they can act on their own behalf to save their own property. We help to keep the housing market level. When neighborhoods suffer a few foreclosures, the housing values of the entire area are adversely affected.
I guess I feel that we are being singled out. We tried to help a couple who were in a terrible situation. They are looking to get something for nothing and lying all the while. A couple of weeks ago I had to hire another attorney to stop this same couple from taking our tenants (who are in this house in question) to eviction court. They swore to tell the truth and then proceeded to tell the judge that they had a verbal rental agreement with our tenants so that they could collect the rent for two months, and then move into the property again. The case was dismissed, thankfully.
Does anyone have any suggestions? We feel that “Subject To” deals as far as our state goes are in jeopardy if this insanity with the Attorney General’s office continues."
I just recieved this email from the other side
"Dear Mr Cash.
We are the seller on the forums the articles advantages and disadvantages of sub 2 these people are not telling the whole truth when we call these people about buying our home we was about 2 months behind on our mortgage she came out and took pictures then she told us that she would be back with a investor friend of hers they came back she said that her friend was goning to try and sell the house so her friend put the sign in the yard FSBO farm august to oct people came out and look at the house some of them like what they saw
some of them would call the investor about the house we did had some people that want this home they told us that the investor would not call them back in the meantime the mortgage company kepting calling i ask her could i tell the mortgage who was trying to help us sell our home she no this tell them that the house would be sold soon.so about late oct 2001 i call the investor and ask her was the house goning to be sold before it go foreclosure she told me to call mrs x and tell her to sell because the people she talk to did like the location.
so mrs x came put asign up and in december 2001 she find so people that want to lease to own so december 13 2001 we did the paper work they was no deed sign that night it was in june 2002 that she ask us to sign a deed she naver told us we was deed the house to her if she had told us that we would not have sgin it when she came to our home with the deed she only had part of the deed the part that was to be noteize she forgot it was in 2002 in march before we got a copy of the papers we sign they naver went over any thing with us.
we had this house for 13 yrs we refanance 1 time in 13 yrs we try to work with mrs x but she is a hard lady to deal with
also our turck is in our name alot of the thing she said about us is not true we are good people people love us here in nc we will be doning a Blog on this story it’s so much more to tell mrsx have went and try to talk to our chapter 13 lawyers they want to know who she was as for our home my broker and i are trying to do a short sale on our home
Thank’s for listenig"
I did not edit this email, just to show that by reading it I would think that most investors would understand what really happened, these folks should have been helped out in their situation not from a creative investor standpoint, but from a humanitarian standpoint.
When we speak with sellers we should bear in mind that we can help folks without doing the deal just to do a deal. When we do things to help folks the word will get out and maybe the Attorney General’s will look beyond just a bunch of hungry investors looking to take advantage of people.
John $Cash$ Locke